/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/000831.MBX C L A S S A C T I O N R E P O R T E R Thursday, August 31, 2000, Vol. 2, No. 170 Headlines ACLARA BIOSCIENCES: Once Threatened with Securities Suit over Repurchase ACRODYNE COMMUNICATIONS: Berman DeValerio Files Securities Suit in MD ADVANTICA RESTAURANT: Counsel Used Tape to Push Racism Suits off AUTO INSURANCE: Six Racketeering Suits Accuse of Value Underestimation BRIDGESTONE/FIRESTONE: Tyre Faults Much Greater in Venezuela Than in US DESERT DOCUMENT: Unauthorized Legal Documents Suit Survives Dismissal FORD MOTOR: Facing Ignition Recall In California GEORGIA POWER: Says 5 Hangman Nooses Found But Only 1 Intended As Sign HMOs: HCFA Settles Claim over Advance Notification of Medicare Cut off HOMEGOLD FINANCIAL: Subsidiary Sued for Role in Home Loan thru Chase INS: Faces Lawsuit of Delays in Legal Immigratn Citizenship Applications JDN REALTY: CEO Says Troubles over; Shareholders and Analyst Have Doubts LOS ANGELES POLICE: Fed Judge Rules Rackets Law Can Be Used MICROSOFT CORP: California Judge Allows Lawsuit over Monopoly to Proceed MICROSOFT CORP: Some Analysts Say Lawsuits Face Uncertain Future NEIGHBORCARE PHARMACY: Under Ch 11; Settles Claims over Inflated Prices PEERLESS SYSTEMS: Finkelstein & Krinsk Files Securities Suit in CA RENT A CENTER: Schlichter, Bogard Files Sex Discrimination Lawsuit SAFETY-KLEEN: Kirby McInerney Files Suit on Behalf of 2008 Bond Buyers SEAGATE TECHNOLOGY: Update on Lawsuit over Veritas/Silver Lake Merger TEXAS MEDICAID: Judge Orders State to Improve Children's Programs TOBACCO LITIGATION: AL Favors Simplicity in Leverage; Bonds Get Aa1 & A U.S. AGENCY: Settlement Approved In Employment Age-Bias Case ********* ACLARA BIOSCIENCES: Once Threatened with Securities Suit over Repurchase ------------------------------------------------------------------------ Earlier this year Aclara Biosciences Inc. received correspondence from an attorney representing certain minority shareholders of 2C Optics (the company's former parent company), alleging violations of corporate and securities laws by ACLARA and one or more of its directors, in connection with a repurchase of Aclara's Series A preferred stock from 2C Optics in March 1999. According to Aclara, the attorney threatened litigation to force the company to sell to his clients shares of ACLARA stock, at $0.60 per share (the price at which they were re-purchased), equal to each clients' pro rated portion of the shares repurchased. Aclara Biosciences signed a settlement agreement with 2C Optics (now named Rodenstock, N.A.) on August 17, 2000, pursuant to which Rodenstock has agreed to drop all its claims against us in exchange for receipt of a payment. The settlement agreement was approved by the board of directors of Rodenstock and a majority of Rodenstock's outstanding shares entitled to vote on the matter. ACRODYNE COMMUNICATIONS: Berman DeValerio Files Securities Suit in MD --------------------------------------------------------------------- Berman, DeValerio & Pease LLP Boston issues the following press release: Acrodyne Communications, Inc. (NASDAQ:ACRO) has been named as a defendant in a shareholder class action lawsuit filed in the United States District Court for the District of Maryland. The action, brought by Berman, DeValerio & Pease, LLP, www.bermanesq.com, seek damages for violations of the federal securities laws on behalf of all investors who purchased Acrodyne common stock between May 18, 1999 and August 14, 2000 (the "Class Period"). The complaint alleges Acrodyne and certain of its current and former officers with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In particular, the Complaint claims that Acrodyne improperly overstated its inventory and gross profits during the Class Period, which will require the Company to amend and restate its 1999 year-end results and its results for first quarter ended March 31, 2000. On August 14, 2000, the Company issued a press release announcing that that it would delay the filing the Company's Form 10-Q for the quarter ended June 30, 2000. The Company also disclosed that it planned to amend and restate its financial results for 1999 and the first quarter of 2000, and that it would engage an independent accounting firm for the purpose of conducting a full review of the inventory balances and related activity to determine the extent of any amendment and restatement. As a result of these revelations, Acrodyne's stock price tumbled approximately 37% on August 14, 2000, until NASDAQ halted trading. As of the date of this release, trading has not resumed. Contact: Berman, DeValerio & Pease LLP Patrick T. Egan, Esq. (800) 516-9926 bdplaw@bermanesq.com ADVANTICA RESTAURANT: Counsel Used Tape to Push Racism Suits off ---------------------------------------------------------------- When Jon K. Stage heard that Advantica Restaurant Group Inc., owner of the much-maligned Denny's restaurant chain, was going to be sued yet again for allegedly denying service to minority customers, one of the first things he wanted to know was whether there was a tape. Much like the fan who throws up his hands in frustration when instant replay shows the umpire made a bad call, Mr. Stage -- after obtaining such a tape from a security camera -- saw that what the plaintiffs alleged to have happened on Oct. 27 at the Denny's in Cutler Ridge, Fla., did not. But unlike the frustrated fan, Mr. Stage did something about it. As outside counsel to Spartanburg, S.C.'s Advantica, Mr. Stage, a partner in the Fort Lauderdale, Fla., office of Akerman, Senterfitt & Eidson P.A., used the tape as a sword, threatening sanctions to push two plaintiffs' lawyers off the case and, on Aug. 2, to get the case dismissed. Flagler v. Advantica, No. 99-3107. His blitzkrieg approach is an example of how Denny's hobbled by years of discrimination cases filed by minority customers, is now using aggressive litigation tactics to defend its corporate image against opportunistic plaintiffs. One hour or 10 minutes? Miami residents Ronald Flagler and Janet P. Jones, who are black, alleged in a lawsuit filed on Nov. 16 in U.S. District Court for the Southern District of Florida that, after being seated on the morning of Oct. 27 in a Dade County Denny's, they were ignored for nearly an hour while white customers were seated and served. First represented by Miami attorney Ellis S. Rubin, the plaintiffs sought unspecified damages for alleged discrimination in a public accommodation. The complaint noted previous similar suits against Denny's, concluding that the similar cases indicated a "willful disregard of the rights of African Americans." Alerted to the coming lawsuit, Mr. Stage said that he obtained and reviewed the tape from the camera installed over the restaurant's cash register. It revealed, he said, that the plaintiffs were in the restaurant for only 10 minutes before leaving. It also showed that several black and Hispanic patrons were seated during the short period that the plaintiffs were there, he said. Mr. Flagler and Ms. Jones alleged that no black patrons were served while they were seated in the Denny's. Mr. Stage waited until the plaintiffs were deposed and had restated the charges leveled in the original complaint. Then he pounced, providing the plaintiff's attorney with a copy of the tape. "After further investigation, we decided to withdraw from the case since we didn't want to violate Florida bar rules or Rule 11," said Mr. Rubin, referring to the federal rule penalizing lawyers for bringing frivolous litigation. The plaintiffs, however, retained another lawyer, Miami's Oscar Syger, who also dropped the case when confronted by the videotape and threats of sanctions, said Mr. Stage. Mr. Syger did not return calls seeking comment. "We've used security film where we've represented several people accused of shoplifting or being brutalized by security guards," said Mr. Rubin. "It either works for us or it doesn't, but every time, it's very critical" to the outcome. In 1994, Denny's settled a $ 46 million class action with hundreds of black customers who had alleged that they were refused service at the chain's restaurants. Although the chain of 1,800 restaurants contends that it has since given diversity training to its employees, increased black-owned franchises and complied with a federal civil rights monitor, it is still the subject of a high number of public-accommodation lawsuits. Mr. Stage brought the Denny's account with him to Akerman Senterfitt after leaving Holland & Knight L.L.P. in the early 1990s. Since then, he has handled four public-accommodation lawsuits against his client. Two, including the Flagler case, have been dismissed, and one ended in summary judgment for Denny's. The fourth, brought last year, involved nine Florida corrections officers who were seeking $ 10,000 in damages each. Although they won their suit, the judge awarded each plaintiff only $ 300, noted Mr. Stage, attributing their treatment to a "rogue manager." "We had a security camera in that case, too, but by the time we got the tape, it had already been recorded over," Mr. Stage said. Advantica General Counsel Rhonda Parish said that her company has taken a dual approach to bias claims by pre-investigating every claim made, but also by vigorously defending itself when a claim is deemed frivolous. "They might be thinking that you're an easy target, that perhaps you will settle the case to make it go away," she said. "If we determine it's a frivolous lawsuit, we will fight it tooth and toenail." (The National Law Journal, August 28, 2000) AUTO INSURANCE: Six Racketeering Suits Accuse of Value Underestimation ---------------------------------------------------------------------- Six racketeering suits accuse insurance companies of conspiring with an independent valuation service to underestimate the value of damaged vehicles. The suits, filed in state court in Fulton Co., Ga., include three by individual policyholders and three proposed class actions. Allstate Insurance Co. and State Farm Insurance Co. are among the defendants. The common factor in all six cases is Delaware's CCC Information Services, Inc. (The National Law Journal, August 28, 2000) BRIDGESTONE/FIRESTONE: Tyre Faults Much Greater in Venezuela Than in US ----------------------------------------------------------------------- The Ford Motor company's Venezuelan subsidiary, Ford Motor de Venezuela, said yesterday that the incidence of faults in Firestone tyres was nearly "1,000 times" higher in Venezuela than in the US, where 62 deaths have been linked to tyre failures, agencies report from Caracas and Nashville. Hector Rodriguez, purchasing manager for Ford in Venezuela, said a company investigation found that 14 per cent of Firestone's 15-inch tyres, fitted as standard on Ford's 4x2 Explorer, showed signs of the tread separating from the tyre. "This is a number almost 1,000 times higher than in the US," he said. In the case of Firestone's 16-inch tyres, fitted on Ford's 4x4 Explorer, the number of tyres with faults was even higher, Mr Rodriguez said, at around 17 per cent. Venezuela's government consumer protection agency, Indecu, has said it could recommend criminal action against Ford and Firestone, a unit of Japan's Bridgestone, for misleading consumers about their products with fatal consequences. A court case in the South American nation would be a further blow for the companies, amid a US government investigation into some 100 accidents and 62 deaths linked to Firestone tyres, most on Ford's Explorer, the most popular sport utility vehicle in the US. Ford officials noted that Indecu had yet to close its investigation, and said it would be premature to apportion blame for accidents in Venezuela. Indecu president Samuel Ruh has said the organisation would present its report tomorrow. Ford said it had already changed the tyres on around 60 per cent of the estimated 28,000 Ford Explorers in Venezuela, and expected to refit the remainder in the coming weeks at a total cost of around Dollars 15m (Pounds 10.2m). Ford is using Goodyear tyres to replace the Firestone models. The tyre maker's parent company, Bridgestone of Japan, said yesterday it had boosted production in Japan by 650,000 tyres to help fill the need for replacement tyres in the US. In Tokyo, shares in Bridgestone fell 6 per cent yesterday on news of the possible broadening of its recall into Venezuela and a new class action suit in Chicago. (Financial Times (London), August 30, 2000) DESERT DOCUMENT: Unauthorized Legal Documents Suit Survives Dismissal --------------------------------------------------------------------- The Court of Appeals of the State of Washington refused to dismiss a class action alleging that a mortgage document preparation service, Desert Document Services Inc., was engaged in the unauthorized practice of law for preparing and charging for legal documents, including promissory notes and deeds of trust. (Kim v. Desert Document Services Inc., No. 44451-4-I (Wash. App. 7/17/00).) Wha Young Kim and his wife, Kelly Kim, took out a loan from lender Interfirst Federal Savings Bank in January 1998. Included among the settlement costs was a 68 "document preparation" fee paid to Desert. The Kims sued, alleging that Desert's document preparation service constituted the unauthorized practice of law. They sought declarative and injunctive relief and equitable restitution. Desert moved to dismiss for failure to state a claim upon which relief could be granted. The trial court granted the motion because the complaint failed to allege that Desert employees exercised any legal discretion or that the Kims were injured. On appeal, the Court of Appeals defined the practice of law as including "the selection and completion of 'legal instruments by which legal rights and obligations are established.'" This includes the selection and preparation of notes and deeds of trust, held the court. Desert argued that the Kims' claim rested on the fact that Desert charged a fee for its services. The court, however, interpreted the complaint differently and found the fee to be irrelevant based on prior case law. In Perkins v. CTX Mortgage Co., 969 P.2d 93 (1999), the Washington Supreme Court stated that "[t]his preoccupation with fees is misplaced. We have firmly rejected the notion that a lay person's authority to prepare legal instruments turns on whether a fee is charged." Perkins also held that lenders may prepare documents for their own activities "when lay employees ... do not exercise any legal discretion." According to the Court of Appeals' interpretation, the Kims' complaint sufficiently alleged a cause of action because it alleged: that Desert was not itself a lender; that it designed, completed and selected legal documents for various lenders in the state of Washington; and that Desert used non-lawyers who exercised legal discretion in the process of preparing the documents. The complaint also "sufficiently allege[d] a causal link between the alleged unauthorized practice of law and [the Kims'] standing to seek a private remedy" by alleging that Desert breached the standard of care required of attorneys when Desert failed to explain the relevant legal documents. The court additionally noted that courts generally have a duty to prevent future harm in unauthorized practice cases. Accordingly, the decision to dismiss was reversed and the case remanded. Bradford G. Moore of Leen & Moore in Seattle and Robert B. Jackson of Bellevue, Wash., represented the Kims. D.B. Lamka and John H. Zobel of Davis, Wright, Tremaine in Seattle, represented Desert Document Service. (Consumer Financial Services Law Report, August 21, 2000) FORD MOTOR: Facing Ignition Recall In California ------------------------------------------------ In a ruling that could deal a blow to the Ford Motor Company, a California judge largely agreed late Tuesday with complaints that Ford knowingly installed defective ignition mechanisms in nearly two million vehicles produced from 1983 to 1995. In a preliminary decision, Michael E. Ballachey, a Superior Court judge in Alameda County, east of San Francisco, said he intended to issue orders "compelling recall and repair" of the vehicles. The part in question is an ignition module that regulates current to the spark plugs. In 300 models, the module was mounted on the distributor near the engine block, where it was exposed to high temperatures. Car buyers' lawyers said Ford had been warned by an engineer that high temperatures would cause the device to fail and stall the engine. Consumer advocates estimated that it would cost Ford $70 million to $250 million to comply. The final decision, which will be discussed at a hearing at the Alameda County Court on Sept. 28, could be more damaging to Ford's reputation than its finances, consumer advocates said. In the wake of the Firestone tire recall, the company is working diligently to maintain public trust in its products. "This is bad news at a bad time for the Ford Motor Company," said Clarence M. Ditlow, executive director of the Center for Auto Safety in Washington. The company, he noted, is broadcasting television ads that say, "Trust us, we put safety first." Then, Mr. Ditlow said, "This decision says, 'We put profits first.' " In his 10-page preliminary ruling, Judge Ballachey was sharply critical of the way Ford dealt with the National Highway Traffic Safety Administration. "Ford's strategy, clearly established by the credible evidence was 'If you don't ask the right question, we don't have to answer with what common sense tells us you want to know,' " he wrote. The opening sentence of the next paragraph in the tentative decision reads, "Ford withheld responsive information from NHTSA that it was obligated to divulge." The judge's ruling addresses violations of two California statutes: the Consumers' Legal Remedies Act and the Unfair Competition Law. Susan Krusel, a Ford spokeswoman, responded, "The real-world data and engineering analysis is in direct conflict with the court's ruling." "These modules performed as well as any alternative design at the time," she added. "In 18 years, there has never been any evidence proving that any accident or injury" had ever been caused by one of the modules. "There is simply nothing to fix," Ms. Krusel said. "We expect this ruling will be reversed on appeal." Jeffrey L. Fazio, a lawyer representing the plaintiffs, called the decision "a complete vindication of the claims we have made against Ford." Last November, a mistrial was declared in the first phase of the case, in which jurors were asked to determine whether Ford was liable for compensatory and punitive damages. Jurors were deadlocked 7-5 and 8-4 on two key questions of liability. Nine votes were needed for a verdict in the civil cases. In that trial, Ford denied any defects, saying its vehicles were no more prone to stalling than any others and posed no safety hazard. In March, Ford paid a record $425,000 fine for delays or omissions in providing information to the traffic safety agency about problems with ignition switches that could cause fires. About 25 million Ford vehicles built from 1983 to 1992 had such switches. Plaintiffs' groups in five other states have filed class-action lawsuits against Ford relating to the ignition modules, which are different from the switches. Those cases have been delayed pending the outcome of the California case. (The New York Times, August 30, 2000) GEORGIA POWER: Says 5 Hangman Nooses Found But Only 1 Intended As Sign ---------------------------------------------------------------------- Georgia Power Co. has found five hangman's nooses at company facilities, but decided just one was intended as a sign of racial harassment, the company's chief executive said, responding to a race discrimination lawsuit filed by a group of black employees who claim, among other things, that they have had to endure a racial hostility at work. The lawsuit seeks class-action status to represent all 2,100 black employees of Georgia's Power's parent company, Southern Co. David Ratliffe said Tuesday that a white manager "apparently displayed a noose in the presence of an African-American employee" in 1994 at Plant McDonough near Smyrna but later apologized to the employee and has since retired. Ratliffe said four other nooses had been found since the lawsuit was filed July 27, including one at Plant McDonough. Also Tuesday, lawyers for the seven employees who are suing filed a motion accusing Ratliffe of improperly contacting employees who are prospective plaintiffs as members of a class action. The lawyers for the plaintffs asked that the company be ordered not to make "further improper communications" with prospective class members. Ratliffe said he has contacted employees since the lawsuit was filed, including calling two at home, but he denied trying to encourage them to settle prospective cases or discourage them from seeking legal representation. The lawsuit says the hangman's noose "has long been one of the most chilling representations of racial harassment." It says two Georgia Power executives and several managers were aware of a noose at one company location and took no action to remove it. (The Associated Press State & Local Wire, August 30, 2000) HMOs: HCFA Settles Claim over Advance Notification of Medicare Cut off ---------------------------------------------------------------------- HCFA has reached a settlement in a class action suit brought against the Medicare managed care program by beneficiaries who said they should be notified in advance if their HMOs intend to cut off: treatment and given a chance to appeal. The plaintiffs in Grijalva v. Shalala also argued that the government is legally responsible for the care decisions of Medicare HMOs. The Aug. 9 settlement requires that HCFA issue a notice of proposed rulemaking that a Medicare+Choice enrollee receive four days' advance notice from a plan if it intends to end home care or to terminate facility-based nursing or rehab care. The notice must say that the beneficiary has a right to appeal, and that care will be covered until noon of the day after the appeal is decided. A HCFA spokesperson said similar protections have already been adopted under M+C appeals rights that apply more broadly to care under the program. IAC-ACC-NO: 64697471 (Medicine & Health, August 14, 2000) HOMEGOLD FINANCIAL: Subsidiary Sued for Role in Home Loan thru Chase -------------------------------------------------------------------- On August 20, 1999, Janice Tomlin, Isaiah Tomlin, and Constance Wiggins filed a purported class action lawsuit in New Hanover County, North Carolina Superior Court. The suit was filed against a subsidiary of the Company and others alleging a variety of statutory and common law claims arising out of mortgage loans they obtained through Chase Mortgage Brokers ("Chase"). Since that time, four additional suits have been filed in New Hanover County by plaintiffs claiming to be similarly situated to the Tomlins. The plaintiffs in these cases are seeking unspecified monetary damages. As to the Company's subsidiary, the complaint alleges participation by the Company's subsidiary in an arrangement with Chase under which Chase allegedly charged excessive fees and interest to the consumers, and under which Chase allegedly received undisclosed premiums. There has been no class certification, and the Company intends to contest these cases vigorously. Because these matters are in their early stages, it is not possible to evaluate the likelihood of an unfavorable outcome or estimate the amount of potential loss. INS: Faces Lawsuit of Delays in Legal Immigratn Citizenship Applications ------------------------------------------------------------------------ The Immigration and Naturalization Service has failed to process citizenship applications for thousands of legal immigrants who in some instances now face deportation as a result, according to a class-action lawsuit. The action was filed on behalf of the children and spouses of immigrants who obtained permanent legal resident status under a 1986 amnesty law. The lawsuit names as defendants the INS, U.S. Atty. Gen. Janet Reno and INS Commissioner Doris Meissner. The immigrants face deportation, have lost jobs or cannot find work because the INS has delayed their efforts to legally remain in the United States, according to the lawsuit filed Friday in federal court. Attorneys estimate that 11,000 people in the United States, many of them in California, are affected by the backlog. Most obtained permanent legal resident status under a 1986 amnesty law, while others are eligible for a later program known as Family Unity, which allows relatives of legal residents to remain in the United States while applying for residency. The INS has delayed some applications for two years, said Margaret McCormick, president of the Washington, D.C.-based American Immigration Law Foundation. The foundation is one of three legal agencies that brought the action asking the court to find the INS in violation of the Immigration Act of 1990. The lawsuit also asks that a judge order the INS to immediately process the applications and reduce the processing time to 90 days. "It's a continuing problem with the INS," McCormick said. "There's a total disregard for the amount of chaos they cause in people's lives when they refuse to adjudicate what they're supposed to adjudicate." William Yates, deputy executive associate commissioner with the INS, refused to comment on the lawsuit but acknowledged the backlog. "We're trying within the budget limitations to be as aggressive as we can," Yates said. "We're hoping when the 2001 budget is passed, we'll get more money for backlog reduction." (The Associated Press State & Local Wire, August 29, 2000) JDN REALTY: CEO Says Troubles over; Shareholders and Analyst Have Doubts ------------------------------------------------------------------------ JDN Realty Corp.'s new chief executive declared the company's troubles a thing of the past Tuesday, but shareholders and an analyst disagreed. Chief Executive Craig Macnab said the Buckhead-based retail developer has endured "one of the most difficult six months in the company's history as a public company" and emerged "fundamentally sound and strong." He delivered his message at JDN's annual meeting Tuesday at the J.W. Marriott Hotel in Buckhead. "The good news is that this difficult chapter is now behind us," he said. That's not entirely true. Several shareholders have filed lawsuits in U.S. District Court in Atlanta, and the Securities and Exchange Commission has launched an inquiry into the undisclosed compensation JDN paid to two development executives who have resigned. The lawsuits likely will be consolidated into a class action. "As much as they would like to believe the chapter is finished, there are ongoing legalities," said Pat Hickey, a Robinson-Humphrey Co. analyst. "We're not at the end of the book yet." JDN's trouble began with a Feb. 14 announcement that it paid development executives Jeb L. Hughes and C. Sheldon Whittelsey IV $ 4.9 million in undisclosed compensation in connection with several real estate transactions from 1994 to 1998. A special JDN committee discovered that some of the transactions involved Wal-Mart Stores and Lowe's Cos. JDN had to pay the companies about $ 5 million each to correct what Macnab on Tuesday deemed "cost discrepancies." The day of the announcement, JDN's stock lost 40 percent, closing at $ 9.81 a share. The price has yet to recover to earlier levels even as real estate investment trusts regain favor among investors. It closed unchanged Tuesday at $ 10.25 a share. The accounting irregularities prompted several top JDN executives, including founder J. Donnie Nichols, to resign. Macnab was named chief executive in April. Nichols' wife, Elizabeth Nichols, will step down as president Friday. Macnab defended the $ 3 million-plus severance package she will receive, telling an irritated shareholder at the annual meeting that evidence shows she knew nothing at all about the undisclosed compensation arrangements. After the meeting, Macnab said JDN would attempt to settle with shareholders who have sued. Analysts have said JDN could have to pay as much as $ 100 million to settle the lawsuits. "There are a range of estimates out there, and the challenge of management is to settle in the lower end of those estimates," Macnab said. Heading his first annual meeting as chief executive, Macnab delivered a calm performance in a charged atmosphere, but he didn't impress everyone. "They're still not being honest," said shareholder David Addington, who wore a baseball cap with a derogatory message about JDN. He said he was irked that Macnab would not give more details about JDN's payments to Wal-Mart and Lowe's. Roswell shareholder Ken Kullmann said JDN should have revealed more details about the accounting irregularities that caused the problems. "I'm surprised that a company trying to do damage control isn't more forthcoming," he said. "That's the first rule: Get everything out on the table." One JDN shareholder told Macnab he was satisfied with the meeting. "I'm happy with the answers and direction," said George Puskar, former head of Equitable Real Estate, a large Atlanta-based company that now is part of Lend Lease Real Estate Investments. (The Atlanta Journal and Constitution, August 30, 2000) LOS ANGELES POLICE: Fed Judge Rules Rackets Law Can Be Used ----------------------------------------------------------- A federal judge has ruled that the government's anti-racketeering statute, created to deal with drug bosses and organized crime figures, can be used in lawsuits against the troubled Los Angeles Police Department. Besides allowing one of the largest police departments in the United States to be dealt with as a criminal enterprise, the decision by Judge William J. Rea of Federal District Court drastically increases the city's potential liability in its worst police scandal in decades, since the law permits a longer statute of limitations and could triple the damages the city could otherwise face. The case involves claims by one of the many people who say they were victims of violent and corrupt officers at the department's Rampart Division, whose actions are at the heart of the scandal. The city had tried to have this case thrown out, and in making his ruling on Monday the judge rejected that motion. Legal experts said that it appeared the department would be the first police agency in the country to face trial under the statute, which over the years has come to be used in a wide variety of litigation. Edwin Chemerinsky, a law professor at the University of Southern California, said he spent Monday evening researching the matter and could find no other case in which a police department had been brought to trial using the statute, known as RICO -- the Racketeer Influenced and Corrupt Organizations law. Judge Rea did not deal with the credibility of the plaintiff's claim that the department condoned and authorized the actions by the corrupt officers, but said that if those accusation were true, they would constitute racketeering activity and so would come under the RICO law. Under RICO, the statute of limitations is 10 years, rather than 1 year as in other civil rights litigation, so the ruling could open the courtroom to many more cases. For instance, the lead plaintiff in the case, Louie Guerrero, says that the police beat and falsely arrested him on drug charges in November 1997 and that he was released from prison before details of the Rampart scandal became known last year. Under other civil rights laws, his lawsuit against the department would have to be dismissed. Nearly 100 criminal cases have been overturned as a result of the scandal, in which officers are said to have planted evidence and beaten people in a struggling Latino neighborhood for sport and profit. City officials have previously estimated the city's liability at between $125 million to $200 million. "If the plaintiffs prevail," Mr. Chemerinsky said today, "there is staggering potential liability for the city, just staggering." But Mr. Chemerinsky cautioned that the judge had simply ruled that the case could go forward. "Whether the plaintiffs can ultimately prove it," he said, "we'll just have to wait and see." Stephen Yagman, a lawyer for Mr. Guerrero, said, "We have in effect converted a civil rights lawsuit into a racketeering lawsuit, and it's about time." Mr. Yagman said he had no doubt that "a reasonable jury will look at the evidence and agree with what I've been claiming for years: that the L.A.P.D. is essentially a criminal enterprise." Mr. Yagman said his four-lawyer firm has 19 Rampart-related cases and 50 more on file. He said the lawyers were analyzing 100 more potential cases and had brought in a firm with 26 lawyers to help. "And we're thinking about hiring even more lawyers," he said. Both the Police Department and the mayor's office declined to comment and referred all calls to the Los Angeles city attorney's office. Mike Qualls, a spokesman for the city attorney, said, "Obviously, we're disappointed in the ruling, and we're reviewing our options." The Rampart scandal has embarrassed the Los Angeles Police Department for months as story after story about corrupt and brutal officers has chipped away at a reputation already tarnished by the O.J. Simpson case, the Rodney King beating and the riots of 1992. The image long polished by Hollywood and sent across the world by reruns of "Dragnet" seems long gone now. Now, the city and the United States Justice Department are negotiating ways to prevent the federal government from suing the Police Department for a pattern of civil rights violations. Judge Rea also refused the city's request to throw out the plaintiff's request for an injunction that would forbid police officers to engage in the planting of evidence or commit perjury, two pillars of the Rampart charges of official abuse. (The New York Times, August 30, 2000) MICROSOFT CORP: California Judge Allows Lawsuit over Monopoly to Proceed ------------------------------------------------------------------------ A judge allowed the first class-action suit to proceed against Microsoft Corp. on allegations that the software giant's monopoly harmed California consumers. Dozens of similar suits linger nationwide. In a 21-page opinion released late Tuesday, San Francisco Superior Court Judge Stuart R. Pollak said an untold number of California consumers could be represented in one trial to determine whether they were forced to pay unreasonably high costs for Microsoft products. He said denying the suit "could result in repetitious litigation." "This case involves a very large number of claimants with relatively small amounts at stake," Pollak said. "Most consumers have little incentive to litigate independently since the costs of litigation undoubtedly would overwhelm their potential recovery." Microsoft spokesman James W. Cullinan said the Redmond, Wash., company is reviewing the ruling. "This is just one step in a long process in this case," Cullinan said. He declined further comment. Attorneys in the case are scheduled to meet with Pollak on Oct. 4 to prepare for a trial. No trial date has been set yet. The products at issue are Microsoft's Windows operating system, its MS-DOS operating system, Word programs and Excel software purchased on or after May 18, 1994. Microsoft urged Pollak on Aug. 4 not to allow the case to proceed because it would be nearly impossible to determine damages. Microsoft attorney Charles B. Casper argued that the company markets its products to thousands of companies who resell them at different prices, adding that the judge would have to weigh each consumer's claim on a case-by-case basis. Lawyers seeking class-action status said that Microsoft was trying to shield itself behind its size. "Just make your business large enough that you can overcharge and get away with it," San Francisco attorney Daniel J. Furniss argued. Pollak's decision came three weeks after Microsoft asked a federal judge in Baltimore to dismiss or at least consolidate 62 pending federal and state class-action suits. That action is pending and, so far, none have been able to proceed. Courts in Hawaii, Iowa, Kentucky, Nevada, Oregon, Rhode Island and Texas have dismissed similar class-action lawsuits on grounds that laws in those states don't allow them. The majority of the cases nationwide were filed after U.S. District Court Judge Thomas Penfield Jackson in Washington, D.C., ruled that the company violated federal antitrust laws. Microsoft is appealing Jackson's ruling and his order to split the software giant into two companies. Three weeks ago, Pollak suggested that it would be a Herculean task for attorneys to demonstrate how consumers were wronged. "If they can't do it, they'll lose the case," Pollak said. Microsoft has argued that, even if it was a monopoly, consumers in many instances benefited and were not harmed. For instance, Microsoft says Netscape, now a division of America Online Inc., dropped its roughly $50 charge for a Web browser after Microsoft began giving its browser away for free. (The Associated Press State & Local Wire, August 30, 2000) MICROSOFT CORP: Some Analysts Say Lawsuits Face Uncertain Future ---------------------------------------------------------------- Consumer class-action lawsuits seeking damages for Microsoft Corp's alleged abuse of a monopoly position in the software market face an uncertain future, analysts said. "It's not a matter of OK, the... government won the prior (federal anti-trust) case, so Microsoft is cooked... There's still additional elements that have to be proven in these suits (and) some of them are quite complex, said Bruce Schneider, partner at law firm Stroock, Stroock Lavan LLP. There are over 130 consumer class-action cases currently pending against Microsoft in the U.S. The San Francisco Superior Court certified 27 such cases for class-action status on August 29. The lawsuits claim damages from Microsoft relating to its monopoly position in the personal-computer software market. The suits face significant hurdles because they involve end-consumers, rather than original purchasers -- such as computer makers -- of Microsoft's products, anti-trust attorneys said. In June, federal judge Thomas Penfield Jackson found that Microsoft violated federal anti-trust laws in using its monopoly position over its Windows operating system to harm competitors. Microsoft has appealed against the ruling. The class-action cases are unlikely to be resolved before Microsoft's appeal has been either denied or approved, analysts said. The California class-action suit is scheduled to begin trial on March 4, 2002, a court official said. Microsoft will likely not want to settle these cases, but "wait and hope that they can overturn this ruling in Washington, in which case they'll be in a much better position in these civil suits," said Richard Donovan, head of the anti-trust practice at Kelley, Drye Warren. "It's going to be hard for Microsoft in the current climate to go in front of a jury and make its case, because they're going to have to contend with all the negative publicity they've had," Donovan noted. Microsoft spokesman Jim Cullinan, in reaction to yesterday's ruling, said: "This is just one step in a long process, and we believe that at the end of this case it will be shown that the conduct that is being challenged by the plaintiffs do not harm consumers -- it has benefited consumers." Should Microsoft succeed in its appeal: "The foundation on which (the class-action cases) are based will be in serious problem," Cullinan said. If Microsoft loses its federal appeal, the outcome of the civil suits may still be uncertain, analysts said. The class-action cases involve indirect purchasers of Microsoft's products: consumers usually buy software preinstalled on their personal computers. "Under the federal law, and under most state laws, in order to claim damages as a consumer you have to be a direct purchaser," one attorney said on condition of anonymity. This is because of the difficulty in assessing damages to indirect purchasers, he noted. California is one of several states that allows such suits. Consumers are "three levels down from Microsoft... so there is always the problem of apportioning damages," Stroock, Stroock Lavan's Schneider said. It is difficult to determine whether, and by how much, the consumer overpaid in such a case, he said. "The plaintiffs have to prove their damages... That's a whole new ground, and it's an area where... it wasn't the strongest area of the government case, " and the federal ruling "doesn't help them that much," Schneider said. "There's a very complex task ahead," Schneider said. (AFX - Asia, August 30, 2000) NEIGHBORCARE PHARMACY: Under Ch 11; Settles Claims over Inflated Prices ----------------------------------------------------------------------- NeighborCare Pharmacy Services, Inc. as successor-in-interest to Vitalink Pharmacy Services, Inc., is a co-defendant with HCR Manor Care, Inc., as successor-in-interest to Manor Care, Inc., in a lawsuit filed by Joyce Greig on April 13, 1994, in the Circuit Court for the 15th Judicial Circuit in and for Palm Beach County, Florida, case number CL-94-3429-AH. The Greig Complaint alleges of inflated prices for pharmaceutical supplies, fraud, negligence and breach of fiduciary duty. Ms. Greig and a class of similarly situated plaintiffs seek substantial damages. Another complaint, filed by Dorothy Greenfield on November 29, 1993, also in the Florida State Court, case number CL-93-9949-AO, asserts claims for, among other things, inflated prices for pharmaceutical supplies, fraud, negligence and breach of fiduciary duty. The Plaintiffs filed motions for certification of a nationwide class and a Florida sub-class. If the class were certified and the cases were combined, the defendants in one action likely will be named as defendants in the class action and NeighborCare might be named as a defendant. The Greenfield Complaint was amended on February 25, 1994 and on June 7, 1994, and was dismissed by the State Court on November 7, 1994. Ms. Greenfield appealed against the dismissal. Because the two Complaints contain substantially identical counts, the parties to the Greig case agreed to stay the Greig case pending resolution of the Greenfield Appeal. On December 24, 1997, the Florida appellate court reversed in part the State Court's dismissal of the Greenfield Complaint. Following the Florida appellate court's reversal, the parties engaged in limited discovery and began lengthy settlement negotiations. Prior to final discovery relating to class issues, the parties negotiated a settlement under which Manor Care and NeighborCare will each pay the Settlement Amount of $107,500 to the Plaintiffs for the plaintiffs' release of all claims. PEERLESS SYSTEMS: Finkelstein & Krinsk Files Securities Suit in CA ------------------------------------------------------------------ San Diego law firm Finkelstein & Krinsk has instituted a class action lawsuit against Peerless Systems Corporation (Nasdaq:PRLS) for violations of the federal securities laws, including Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The lawsuit was filed in United States District Court for the Southern District of California on behalf of all Peerless shareholders who purchased or acquired PRLS securities between June 11, 1999 through May 25, 2000 (the "Class Period"). The lawsuit alleges that Peerless and certain of its management insiders intentionally participated in a scheme to artificially inflate the Company's stock price to allow certain critical acquisitions to proceed and preserve Defendants' share holdings. Peerless, purportedly a key provider of software-based embedded imaging systems to original equipment manufacturers (OEMs) of digital document products, (including, for example, printers, copiers, fax machines and scanners) is alleged by this action to have issued a series of false and misleading statements during the Class Period that failed to reveal that business was deteriorating and a conscious and intentional decision was made by management to replace the Company's failing business model without disclosing facts necessary for such action. In truth, as alleged in the complaint, the decision by Peerless to change its business model caused royalty recognition and, thereby revenue, to be misstated as "block royalties" and replaced the payment process previously reported for Peerless. As alleged in the complaint, this conduct disguised the decline of Peerless' business; the Company's chairman, chief executive officer and material chief financial officer have now departed. Contact: Finkelstein & Krinsk, San Diego Jeffrey R. Krinsk Esq. or Arthur L. Shingler Esq., toll free - 877/493-5366 or 619/238-1333 RENT A CENTER: Schlichter, Bogard Files Sex Discrimination Lawsuit ------------------------------------------------------------------ On August 30, in the U.S. District Court for the Southern District of Illinois in East St. Louis, Illinois, a lawsuit was filed by attorneys Mary Anne Sedey of Sedey & Associates, and Jerome Schlichter of Schlichter, Bogard & Denton, in St. Louis, Missouri, on behalf of 19 women from throughout the United States who are current or former employees of Rent A Center, Inc. Rent A Center is a consumer rental company which has, according to the complaint, approximately 2,100 stores throughout the United States and is headquartered in Plano, Texas. The suit alleges that Rent A Center, Inc. discriminates against women in its promotion, hiring, working conditions, and other employment practices. Among other allegations, this suit alleges that women were subjected to harassment and negative comments about their gender, offensive questions about sexual matters, terminated as a result of pregnancy, and were subject to abusive language. According to the complaint, one woman was told that "women are lucky to be employed." Another woman alleged that while she was pregnant, her manager repeatedly called to get her back to work and called her physician asking him to induce labor. The suit seeks $410 million in damages including back pay and interest for the nationwide class. Contact: Schlichter, Bogard & Denton Jerome Schlichter, 314/621-6115 sbd@uselaws.com SAFETY-KLEEN: Kirby McInerney Files Suit on Behalf of 2008 Bond Buyers ---------------------------------------------------------------------- Kirby McInerney & Squire, LLP has filed a class action complaint on behalf of all persons who purchased - between the period from October 23, 1998 through June 9, 2000 - the 9.25% Senior Subordinated Notes due 2008 of Safety-Kleen Services, Inc., guaranteed by Safety-Kleen Corporation, Inc. (NYSE: SK) and its domestic subsidiaries (the "2008 Bonds") (CUSIP No. 78649QAA3). An amended class action complaint was filed in the United States District Court for the District of South Carolina, Columbia Division, on August 23, 2000 (C.A. No. 3-00-145 17). The complaint names as defendants: (i) three of Safety-Kleen's senior officers - former CEO Kenneth W. Winger, former COO Michael J. Bragagnolo, and former CFO Paul R. Humphreys (the "Individual Defendants"); (ii) Laidlaw, Inc. ("Laidlaw"), Safety-Kleen's largest stockholder; and (iii) PriceWaterhouseCoopers, LLP ("PWC"), Safety-Kleen's auditor during the Class Period. The complaint alleges that, as admitted by Safety-Kleen on and after March 6, 2000, Safety-Kleen issued materially false and misleading financial statements throughout the Class Period. These materially false and misleading financial statements, as the complaint alleges, artificially inflated the price of the 2008 Bonds until, as the truth about Safety-Kleen began to emerge in early March 2000, the value of 2008 Bonds suddenly and dramatically collapsed. On March 6, 2000, Safety-Kleen shocked investors by announcing that it would investigate accounting irregularities in Safety-Kleen's financial statements issued since late 1997, and that Safety-Kleen's most senior officers, the Individual Defendants here, would be placed on administrative leave pending the investigation. On March 9, 2000, PWC withdrew its previously-issued reports on Safety-Kleen's financial statements for the fiscal years ended August 31, 1997, 1998, and 1999. The Securities and Exchange Commission ("SEC") has commenced a formal investigation of Safety-Kleen while Safety-Kleen itself is conducting a forensic audit to determine what its true financial and operational position is. The resignations of the Individual Defendants were announced on May 12, 2000. On or about May 30, 2000, Safety-Kleen defaulted on its debt payments, and on or about June 9, 2000, Safety-Kleen and Safety-Kleen Services, Inc. filed for bankruptcy under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. As a result of these events, the 2008 Bonds' trading price plunged from 91% of par value in early March 2000 to 12% of par value by mid-March 2000 to 6.75% of par value on June 9, 2000 - a decline of over 92%. The lawsuit seeks to recover losses suffered by persons who, relying on the financial statements later admitted by Safety-Kleen to be materially false and misleading, purchased the 2008 Bonds either in their offering via a Registration Statement dated October 23, 1998 or thereafter in the secondary market. The complaint alleges and details the materially misleading statements and financial statements included in the Registration Statement, as well as the materially misleading statements and financial statements issued by Defendants throughout the Class Period. The complaint asserts claims for: (i) violations of Section 11 of the Securities Act of 1933 against the Individual Defendants and PriceWaterhouseCoopers; (ii) violations of Section 12(a)(2) of the Securities Act of 1933 against Defendants Kenneth A. Winger and Paul R. Humphreys; (iii) violations of Section 15 of Securities Act of 1933 against the Individual Defendants and Laidlaw, Inc., (iv) violations of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, against the Individual Defendants and Laidlaw, Inc.; and (v) violations of Section 20(a) of the Securities Exchange Act of 1934 against the Individual Defendants and Laidlaw. Contact: KIRBY McINERNEY & SQUIRE, LLP Ira Press, Esq. Orie Braun 212/317-2300 Toll Free: 888/529-4787 obraun@kmslaw.com SEAGATE TECHNOLOGY: Update on Lawsuit over Veritas/Silver Lake Merger --------------------------------------------------------------------- As previously reported in the CAR, following the Company's announcement of the VERITAS/Silver Lake transaction, a number of stockholders filed lawsuits in both Delaware and California against the Company, the individual members of the Board of Directors and certain executive officers, VERITAS and Silver Lake. Following the announcement, 17 complaints were filed in the Chancery Court of Delaware. On April 18, 2000, those 17 lawsuits were consolidated into one action by the Delaware Chancery Court. On April 19, 2000, plaintiffs filed an amended consolidated complaint. Update: Defendants Seek Coordination; Plaintiffs Initiated Discovery On May 22, 2000, the Delaware Chancery Court certified the Delaware action as a class action. In California, three complaints were filed in Santa Clara County Superior Court and two complaints were filed in Santa Cruz County Superior Court. On June 8, 2000, the defendants filed a Petition for Coordination seeking coordination of the five California actions in a single forum. The complaints in both jurisdictions all essentially allege that the members of the Company's Board of Directors breached their fiduciary duties to the Company's shareholders by entering into the transaction with VERITAS/Silver Lake. The complaints also allege that the directors and executive officers have conflicting financial interests and did not secure the highest possible price for the Company's shares. All the complaints are styled as class actions, and seek to enjoin the transaction with VERITAS/Silver Lake and secure damages from all defendants. None of the defendants has yet responded to the complaints. The Delaware plaintiffs have initiated discovery in preparation for filing a motion for a preliminary injunction. The Company and the individual defendants believe that none of the lawsuits has any merit and intend to defend all these claims vigorously. TEXAS MEDICAID: Judge Orders State to Improve Children's Programs ----------------------------------------------------------------- A federal judge has ruled that Texas' system for administering preventative medicine and certain other health care for children in Medicaid programs is badly flawed, and he has ordered the state to make improvements. The judge, Senior Judge William Wayne Justice of Federal District Court, found that the state had not lived up to the terms of a 1996 consent decree or provided appropriate health care under federal law to more than 1.5 million children eligible for Medicaid. Most of the ruling was focused on the Early Periodic Screening, Diagnosis and Treatment program, which exists, the judge said, "to ensure that poor children receive comprehensive health care at an early age, so that they will develop fewer health problems as they grow older." But Judge Justice, in a ruling filed on Aug. 14, found, among other things, that the state had failed to educate indigent families about available treatments and had not provided transportation to see doctors. The judge also found that the managed care plans that serve about 1 in 3 Texans on Medicaid have not provided appropriate care. He cited inadequate and incomplete medical checkups by health maintenance organizations and other managed care plans, and said that in some cases H.M.O.'s had improperly blocked children's access to specialists. In one example, the judge cited testimony about a 17-month-old boy who had been treated for ear infections 17 times. After treating the boy three more times, the boy's new primary care doctor sought permission from the family's Medicaid H.M.O. to send his patient to an ear, nose and throat specialist. The request was turned down because the primary care provider had not treated the boy six times in the past six months, as was required by the H.M.O. The class-action lawsuit was filed in 1993 on behalf of Texas children eligible for Medicaid. About 1.4 million children in the state do not have health insurance, according to public-interest groups, and about 600,000 of those are eligible for Medicaid. The ruling comes as Gov. George W. Bush of Texas, the Republican presidential candidate, has faced accusations of striking inadequacies in the state's health care for poor and uninsured children. Linda Edwards, a spokeswoman for Mr. Bush's office, said the state was spending more money on Medicaid outreach programs. "We believe it is important for children to receive preventative health care," Ms. Edwards said. The lawsuit originally resulted in the 1996 consent decree meant to improve health care for indigent children. But earlier this year, lawyers for the plaintiffs returned to federal court in Austin to argue the state was not living up to the decree. Susan Zinn, the lead plaintiff lawyer, noted that last year Texas lawmakers enacted a moratorium on expanding managed care into any new areas of the state. "The judge's finding on managed care confirms that the state does not yet have its house in order," Ms. Zinn said. Carolynn Singleton, a registered nurse who owns four North Texas clinics that serve mostly poor patients, described the state system as chaotic a very difficult for indigent patients to navigate. "Most are worried about keeping their lights and water on, not whether their child has immunizations or health care," said Ms. Singleton, who testified in the suit. The system, she said, "imposes too many barriers that isolate them from that care." Andrea Horton, a spokeswoman for the attorney general's office, said that the state had not decided whether to appeal and that it was too soon to say what remedies might be proposed. Ms. Horton declined to comment about the judge's characterizations of the state's system, but pointed to court filings by the state that contend that the state's efforts are adequate. According to those filings, the state made almost five million "outreach" contacts to clients last year; the budget for medical transportation has increased by 300 percent; and a $7.6 million contract for Medicaid outreach services is the largest in the United States. Ms. Zinn noted that lawmakers including Governor Bush have pushed tax cuts, money that could have gone toward health care. The tax cuts pushed by Mr. Bush have become a political issue as the state has run into a larger than expected budget shortfall, due in part to higher Medicaid expenses from rising prescription costs. (The New York Times, August 30, 2000) TOBACCO LITIGATION: AL Favors Simplicity in Leverage; Bonds Get Aa1 & A ------------------------------------------------------------------------ Alabama, moving forward on a path that is likely to make it the first state to securitize its share of the national tobacco settlement, has apparently decided to favor simplicity of structure over leverage, allowing it to earn high ratings on its offering without the complex "trapping events" and flexible amortization structures that earlier issuers employed. The state plans to sell $50 million of settlement-backed bonds through the Alabama 21st Century Authority next week. Moody's Investors Service on August 28 rated the deal Aa1, while Standard & Poor's rated it A. The issue will include serial maturities from 2001 through 2010, with term bonds in 2015 and 2020. Merchant Capital LLC is the senior manager for the negotiated deal. Chris Howley, a director in structured finance at Standard & Poor's, said the agency's rating is comparable to ratings assigned in the past. For example, New York City received a AA rating on the first five years of the transaction, a plus in the next five years, and an A rating on the longer-dated maturities. "The A rating over the long time was the highest rating that these kinds of transactions could currently receive from Standard & Poor's," Howley said. However, New York City's issue was more highly leveraged, meaning that if the cigarette consumption-driven settlement payments fall short of expectations, there is a greater risk that the revenues will fall short of the minimum necessary to pay bondholders. In addition, the earlier deals also included the complex trapping events, which would require the issuers to set aside more of their annual payments for investors. The triggers for the traps included things such as declines in volume of domestic tobacco consumption, the reduction in the rating to below investment grade of an original participating manufacturer with significant market share, or a material increase in the market share of cigarette manufacturers who are not participating in the settlement. One analyst considered Alabama's deal "superior" to previous transactions due to the relatively small size of the issue, an unusually high anticipated debt service coverage ratio of 10.3 times, the use of serial revenue bonds with maturities from 2001 through 2010 and term bonds maturing in 2015 and 2020, and a lower possibility of default, which was found in the simulations run by both rating agencies. Investment bankers have recently said that simplifying the transactions would be important for attracting more investors to the tobacco-bond sector, and ultimately would improve the bonds' liquidity, possibly leading to lower yields for issuers. Despite the relatively high ratings, both agencies have common concerns about all tobacco securitizations, and those include a projected decrease in the number of smokers and the risk that the manufacturers could be bankrupted by lawsuits such as the Engle "sick smokers" class action case in Miami. A particularly favorable aspect of the Alabama structure is that debt service payments are based upon a state statute that makes an "irrevocable and continuing" appropriation of the tobacco settlement payments deposited in the Alabama 21st Century Fund. Those tobacco payments coming to the state and pledged to the bonds are required by the statute to be deposited into the fund and used first for debt service before being available for transfer to the state general fund for other designated purposes, said Michael Kanef, an analyst in Moody's public finance group. (The Bond Buyer, August 30, 2000) U.S. AGENCY: Settlement Approved In Employment Age-Bias Case ------------------------------------------------------------ A federal judge has signed off on a settlement to a class-action age-discrimination suit against the U.S. Agency for International Development, granting $ 5.5 million to 96 former employees who said they were laid off because of their age. The settlement also gives the plaintiffs, let go in a 1996 downsizing, preferential status for agency contract positions for the next three years. "This is a significant win for older federal workers," said Burton Fretz, executive director of the National Senior Citizens Law Center, which was co-counsel in the case. Fretz also noted that the settlement is one of the largest federal payments ever made in an age-discrimination case. A USAID statement said the agency made the settlement to avoid further litigation. "USAID has been firm in its position that it has not violated the [Age Discrimination in Employment Act] and there has been no finding by the court that the agency has done so," the statement read. "The settlement agreement recognizes that there is no admission on the part of USAID of liability or wrongdoing." The trial, which took place last November, involved more than 30 witnesses and 375 exhibits entered into evidence. The plaintiffs claimed that USAID targeted workers in higher job grades by manipulating placement of older workers in jobs unprotected by the layoffs and by protecting younger workers. All but one of 97 employees terminated during the reductions were over 40, and two out of three employees were over 50. Federal law protects individuals 40 and over from discrimination based on age. The NSCLC said the agency has since hired back about one-third of those laid off as either full-time or contract employees. David Evans, the lead plaintiff in the case, was one of the employees hired back. (The Washington Post, August 29, 2000) ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Theresa Cheuk, Managing Editor. Copyright 1999. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *